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'Idol' Lawsuit Sparks Debate: Should Agents Still Be Licensed?

Phillip Phillips' legal battle with his managers and WME's growth beyond agenting highlight a decades-long requirement some say is an outdated "disgrace."

This story first appeared in the Feb. 13 issue of The Hollywood Reporter magazine.

American Idol winner Phillip Phillips is no prostitute, but when he filed a petition with the California Labor Commissioner on Jan. 22 to free himself from an "onerous" management contract, he cited a law that traces to a century-old effort to stop "agents" from sending young women into whorehouses.

The Talent Agencies Act, which now says only licensed talent agents can "procure" employment for clients, renders personal managers vulnerable to seeing client contracts voided and commissions lost if they wade into agenting territory. But many Hollywood representatives chuckle at the legal distinction, given that modern managers now often work in tandem with agents to help procure jobs and revenue for clients. On Jan. 28, the WME agency bought, via its IMG arm, Dixon Talent, a management company that represents Jimmy Kimmel, Stephen Colbert and Jon Stewart, further blurring the lines between agents and managers. Many now believe that agent licens­ing has out­lived its usefulness.

"The TAA is a disgrace and getting even worse," says Dina LaPolt, a lawyer who represents such artists as Steven Tyler and EDM star Deadmau5. She has attempted to enlist guilds like SAG-AFTRA to back her efforts to change the law, while the National Conference of Personal Managers is in court to have the TAA declared unconstitutional as a violation of due process, equal protection and interstate commerce.

The problem with the agent licensing law, says LaPolt, is that while some limited regulations make sense, agents aren't always involved in the finer points of dealmaking for today's stars. Managers handle things such as crafting sponsorships and pursuing opportunities for developing talents that the bigger agencies don't prioritize. In particular, the complex working environment of the music and digital industries often requires more hands-on efforts by managers. "There's a reason why at the Oscars, everyone thanks their agents, while at the Grammys, everyone thanks their managers," says LaPolt.

The TAA attempted to carve out an exemption for recording contracts, but when the California Legislature passed the law in 1978, artists weren't making so-called "360 deals," or multiple-rights agreements like the one Phillips, 24, inked with Idol producer 19 Entertainment.

By many accounts, management firms are now booming but must now contend with the uncertainties posed by the TAA. Thanks to an October 2013 decision (Solis v. Blancarte) by the California Labor Commissioner, entertainment lawyers are worried too of running afoul of the TAA. Meanwhile, licensing in many professions is getting a second look thanks to the popularity of Uber, the upstart private car service app that is challenging traditional taxi authorities around the globe

Still, some defend the law as an important pro­tection against those who would take advantage of wannabe stars. Karen Stuart of the Association of Talent Agents points to the onus on licensed agents to not charge upfront fees, to not commingle client funds and to cap commission percentages. "Of course, it's easier to be a manager," she says. "There's a lot less regulation. We could all call ourselves agents if you take the burdens off of them."